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Thursday, Oct 23, 2014


Aerospace Industry Buyers Increasing Procurement Expenditure Over the Next 12 Months

  • In 2011, suppliers emerged as more optimistic than buyers, with 71% of supplier respondents indicating a rise in optimism as against 52% of buyer respondents with similar expectations.

In 2011, suppliers emerged as more optimistic than buyers, with 71% of supplier respondents indicating a rise in optimism as against 52% of buyer respondents with similar expectations. Slow economic recovery, stringent austerity programs including cutbacks on government spending, financing constraints and uncertainty in the market are likely reasons for the lower growth optimism among buyers in comparison to suppliers. Growth optimism has, however, increased considerably for both buyers and suppliers as compared to the 2009 results.

Across the aerospace industry, 66% of respondents are more optimistic about revenue growth for their companies over the next 12 months than the previous 12 months. Executives from aerospace buyer companies expect increased levels of consolidation over the next 12 months, with 55% of respondents predicting at least some increase.

Reasons behind the growth in optimism include strong growth in air travel around the world for both civilian and military purposes, decreased global economic uncertainty, strong growth in emerging markets such as India, China, Mexico and Brazil, and the growing demand for new, fuel-efficient aircraft following rising jet fuel prices. Demand for aircraft will grow strongly in 2011–2012 with more solid rates of global economic recovery encouraging overall business growth.

However, high fuel prices resulting from a rise in international oil prices and increasing raw material costs, including aluminium, is exerting pressure on profitability and acting as a stimulus to switch to inorganic growth. Attempts to reduce operating costs and increase organizational efficiencies are also major factors in the rise in consolidation expectations.

Across the aerospace industry, 66% of respondents are more optimistic about revenue growth for their companies over the next 12 months. Strong growth in global air travel for both civilian and military purposes is driving the global aerospace industry.

Overall, aerospace industry executives expect to see increased levels of consolidation, with 55% of respondents predicting at least some increase in merger and acquisition (M&A) activity over the next 12 months.

Aerospace industry buyers consider China to be the most promising emerging market, while suppliers assign most importance to India. Nevertheless, both buyers and suppliers consider China, India and Middle East to be the most important markets for growth.

Buyer procurement budgets are expected to rise over the next 12 months by an average of 6%, while 32% of respondents expect their budgets to increase between 5% and 25%. With the recovery of the global economy, many aerospace industry buyers are looking to expand their businesses into high-growth regions such as China, India, Singapore, Taiwan, Hong Kong, the US, the Middle East, Germany, Brazil, Australia, South Korea and the UK.

 

Read more on ASDReports

Source : ASDReports - Market Research

Published on ASDNews: Feb 2, 2012

 

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